International Payroll Projects – My Top 10 Lessons

I recently was involved in a conversation on LinkedIn about experience in and lessons learned from projects to standardise payroll solutions across multiple countries. Below are my top 10 lessons. I would also be interested in hearing back from others on their key lessons learned from international payroll projects.

  1. Ask the question – why standardise? Standardisation may well be the right thing to do, but surely this must be a means and not the end. Understand why you are looking to standardise payroll across the world; what are the business drivers in your case: payroll MI, compliance, service quality, reduction in leakage, cost management? When you have the answer(s), they can become key ‘touchstones’ that help with on-going project decisions – always have a line-of-sight back to the business need.
  2. Process v. content. I find it useful to think about two separate components of a payroll solution: the process and the content. Whilst there is a lot of payroll process that can be standardised, there is a lot of content within the process that is specific to local country pay and tax regulations and local business requirements – this is not to be underestimated.
  3. There is no ‘one-size-fits-all’ international payroll solution, so do not expect to find one. Some solutions (systems, service providers) will be good in some parts of the world and will be good for payrolls of a certain scale and complexity, but these are unlikely to be right for all parts of your organisation. You are likely to need multiple solutions and perhaps a mix of in-house / outsourced delivery. It may even be right to exclude some countries / business units from your standard solution(s).
  4. Consolidate and rationalise. Do not just standardise the process, but seek opportunities to reduce payroll complexity. Whilst it is not always easy (as it often requires negotiation with Works Councils or other representative bodies), do seek the opportunity to simplify payroll delivery by consolidating and rationalising: terms and conditions, numbers of payrolls / pay-dates, numbers of allowance and deduction elements configured in the payroll system etc.
  5. Pick the right service provider(s) as your payroll partner(s). This might seem obvious, but I have seen organisations choose the wrong suppliers for a range of reasons, eg: business needs were insufficiently clear and understood at the time of selection, insufficient time and experience dedicated to the sourcing of service providers, not getting properly aligned around what service partnership means, irrational belief in the value of service measures / SLAs and service credits to drive service quality, and failing to appreciate that the initial sales pitch and the final contract are rarely the same thing.
  6. Payroll service transitions are different to F&A transitions. Whilst a lot can be learned from Finance and Accounting shared service and outsourcing transitions, it is a mistake to just reapply the same methods to payroll knowledge transfer and testing. As a trivial example: whilst you can generally transition accounts payable invoice transactions after a couple of weeks of knowledge transfer activity, the same does not apply to a monthly payroll.
  7. Be clear on responsibilities across the end-to-end payroll process. For example, understand in detail what happens in the shared service centre, what happens locally, what does the payroll provider need and in what format etc. Whilst typical Statements of Work from payroll service providers provide a great start, true understanding generally needs a more in-depth analysis and exploration. Also, do not forget to define and communicate responsibilities for when things go wrong – definitely worth exploring and documenting some scenarios here.
  8. There is no substitute for good people working together. Make sure you have some good people working on the project both on the client side, but also those of any service providers you work with. International payroll projects need a range of different skills to work together, covering: process, project management, change, testing, country specific pay and tax knowledge, business unit knowledge etc.
  9. Take your time. Remember that payroll affects everyone in the organisation and getting it wrong has a massive damaging impact. Country implementations are best grouped into phases and within each group, sufficient time should be allowed for successful transition and testing. I once worked on a global payroll implementation where the international steering group initially wanted to go-live with over 30 European countries all on one-day and within four months of the project kick-off; at least on this occasion good sense prevailed and the implementation was phased.
  10. Be prepared for some hard work and celebrate success. International payroll projects are demanding and challenging. However, this also provides the opportunity to be proud of your successes, so include some celebration costs in your project budget!

Do let me know your thoughts on how to how to make international payroll projects successful, and let me know if you have any questions.